Andriessen v. Aikens

Citations

• 123 Pa. 303
• 16 A. 840
• 1889 Pa. LEXIS 656

Syllabus

<p>(а) In 1871, the directors of an unincorporated banking association recommended to a shareholders’ meeting a resolution to increase its capital 'stock, some of the new shares to be allotted to the existing shareholders and the others to be sold to new subscribers for cash, which resolution was adopted.</p> <p>(б] The directors then advertised the resolution and published official statements which falsely presented a prosperous condition of the bank while in fact it was utterly insolvent, the shareholders, however, having no knowledge of the falsity of the published statements.</p> <p>(a) Upon the faith of these statements a large number of new subscribers were led to purchase of the new issue of shares, and thereafter the bank continued under the same control and direction until in 1875, when it suspended and its real condition then first became known to the new shareholders.</p> <p>(d) Then the shareholders, old and new, united in the assessment and payment of the amounts required to meet the liabilities of the bank, and in 1880, all the indebtedness thenbeing discharged, the new shareholders filed a bill against the old, praying for an account, and for a decree that the moneys paid by them for their shai'es and advanced to discharge said indebtedness should be repaid by the defendants, on the ground of the fraud in said official statements:</p> <p>1. In such case, as the result of the sales of shares to the plaintiffs, they and the defendants became as to third persons partners in fact, and there were equities thence arising between each of them, individually, which could not conveniently be adjusted in an action or actions at law, and a proceeding by bill in equity was a proper remedy.</p> <p>2. Assuming, however, that the plaintiffs were ignorant of the fraudulent .character of the official statements until 1875, as claimed, yet having failed to repudiate the contract promptly after their discovery of the fraud, and having co-operated with the defendants and